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Medicare anniversary trumpeted as finances pose worry

Melissa Nann Burke
Detroit News Washington Bureau

Washington — Retired U.S. Rep. John Dingell Jr., who spent nearly 60 years in the U.S. House, kept the wooden gavel he wielded to preside over the passage of Medicare in 1965.

At 50 years old, the mallet shows signs of wear, with the signatures of co-sponsors fading. For Dingell, it symbolizes the legacy of the federally subsidized health care program for seniors, which today covers 55 million Americans, including 1.9 million in Michigan.

“It’s a big day. I got 59 and a half years of my life invested in it – in pushing it through, then seeing it’s not repealed, eviscerated or gutted or otherwise hurt,” Dingell said Wednesday.

Like his father before him, the Democrat from Dearborn fought for coverage for seniors and helped to bring the Medicare model into existence.

“It’s built into our health care system now. If we took it out today, it would all go to hell.”

But a half-century after President Lyndon Johnson signed Medicare and the federal health care program for the poor called Medicaid into law on July 30, 1965, policymakers and experts are debating how to best sustain them financially.

Medicare has grown to consume 14 percent of the federal budget. Its hospital insurance trust fund is expected to run dry by 2030.

State officials and others will mark the anniversary Thursday.

Unionized nurses, retirees and other activists will hold a rally in Detroit to call for expanding Medicare to cover all Americans. The state’s acting Medicaid director and other health officials will celebrate the federal health care program for the poor in Lansing.

While Medicare spending per person is growing at historically low rates – slower than private insurance spending – the Medicare population is expected to double by 2040 to 80 million people, according to an analysis by the Kaiser Family Foundation.

Costs are projected to rise from the current level of 3.5 percent of gross domestic product or economic output to 6 percent.

“There is this trend of Medicare paying more per person as people grow older, and that poses a big challenge for the future of Medicare, as the number grows of people who are 80 and older and 90 and older and living with multiple chronic conditions,” said Tricia Neuman, director of Kaiser’s Program on Medicare Policy and its Project on Medicare’s Future.

A new center developing possible solutions at the Center for Medicare and Medicaid Services is testing strategies for better coordinating care, especially among people with multiple chronic or complex conditions, Neuman said. The goal is to reduce unnecessary hospitalizations and eliminate other costs and quality concerns stemming from unnecessary care, she said.

Dr. John Ayanian, who directs the University of Michigan’s Institute for Healthcare Policy and Innovation, said there’s hope for savings from the new models of care, such as hospitals collaborating with physicians to care for a patient with specific targets in quality and cost.

“The evidence is very preliminary and mixed, so it’s probably too soon to say whether they’re having a major impact,” he said.

Other reform proposals include raising the age of eligibility from 65, making wealthier seniors pay higher premiums and restructuring benefits as subsidies – a defined contribution to assist with health care premiums.

A Kaiser poll conducted this spring found that Medicare enjoys “tremendous” support among the general public and seniors themselves. But not many of the savings proposals are popular, Neuman said.

Rep. Kevin Brady, R-Texas, who chairs the health subcommittee of the House Ways & Means panel, favors combining Medicare Parts A and B – the program’s hospital services and medical insurance portions – and allow for more competition among insurers for seniors’ business.

“We know the sure way to end Medicare as we know it is to do nothing – to pretend there isn’t a problem and to just stick with what we know,” Brady said Tuesday at a National Journal forum. “We know the damage that does to seniors in the, frankly, not-so-far future. We have to think differently here.”

Rep. Debbie Dingell, the Dearborn Democrat who succeeded her husband John in Congress, has made long-term care a priority of her first term and wants to expand Medicare.

She’s pushing to close some of the “major” gaps in coverage, including hearing aids, dental care and long-term services.

“It’s not clear who’s going to give people the services they need if they don’t need to have full-time care but need assistance,” she said. “... It’s a broken bureaucracy.”


– Half of all Medicare beneficiaries live on an income of less than $24,000 a person. Twenty-five percent live on incomes below $14,400.

– Medicare beneficiaries’ average total out-of-pocket spending on premiums and healthcare was 44 percent higher in 2010 ($4,734) than in 2000.

– Medicare spending per person rises with age, peaking at age 96 at $16,145. The average Medicare spending per capita was $9,839, according to 2011 data.

Sources: Analyses by Kaiser Family Foundation and the Urban Institute